Articles Posted inConstruction Law

McLaughlin & Nardi’s New Jersey construction attorneys represent owners, contractors and building suppliers in the prosecution and defense of construction lien claims.

As discussed in McLaughlin & Nardi’s overview of construction liens, they can be powerful tools for construction contractors, subcontractors, and suppliers who are experiencing difficulties in getting paid for the work that they have performed.

However, when considering whether to proceed with filing a construction lien for either a commercial or residential project, it is important to know that the contractor (“claimant”) act promptly once it starts to experience payment issues.

Disputes over construction projects can be costly, time-consuming, complex and unpredictable endeavors. Arbitration is a mechanism often used to avoid these pitfalls by many in New Jersey construction law. Attorneys from our firm have significant experience in litigating and arbitrating construction disputes. One of the most contentious areas is whether a dispute is subject to arbitration or whether it may be litigated in court. Even more complex is trying to figure out which parts, if any, are covered by an arbitration in multi-issue disputes. New Jersey’s courts recently faced just this problem and issued an important precedential decision.

Construction Arbitration

Arbitration is an alternative dispute resolution process which is popular in the construction industry. It is voluntary, so it can only occur when the parties agree to use arbitration. In New Jersey’s construction industry this generally occurs in the contract for the construction project. Agreements to arbitrate are favored under New Jersey construction law, and courts normally enforce them.

The New Jersey Department of Environmental Protection (“NJDEP”) regulates, monitors, and enforces a wide range of environmental protection and conservation laws throughout the State of New Jersey. The NJDEP is a cohesive government organization which is involved in various programs and areas of environmental protection including recycling, clean water, air quality and pollution, open spaces, wildlife protection, business regulations, waste transportation and disposal, and other environmental areas.

Waste transportation and disposal is one of the major areas which the NJDEP monitors with the important goals of: eliminating illegal dumping (and thus land and water pollution), eradicating criminal activity from the waste removal industry due to a historic connection between the industry and illegal conduct, and educating waste handlers of relevant rules and environmental impacts.

To achieve these goals, the New Jersey State Legislature and the NJDEP have enacted numerous laws, rules, regulations, and reporting requirements for waste transporters. To start, most waste transporters are required to obtain a New Jersey A-901 license. The process for obtaining an A-901 license is not a quick or easy one. Before ever engaging in any waste transportation, the business must provide a great deal of information to the NJDEP, including the source of funding for the business, business locations, lease and lessor information, identification of owners and key employees, etc. On top of that each key employee, owner, partner, officer, director, and managing member must complete a disclosure form which requires a great deal of specific and detailed information such as information regarding family members, employment history, and other personal details. Moreover, each of these people need to be fingerprinted and have background checks conducted.

McLaughlin & Nardi’s New Jersey construction attorneys recently completed a construction arbitration in the American Arbitration Association. After hearing the evidence, the arbitrator awarded our clients $289,918. Maurice McLaughlin was the lead trial attorney. He was assisted throughout by Pauline Young and Robert Chewning, who second chaired the hearings.

Background

The case involved Essex County homeowners who had contracted for extensive renovations to their kitchen. The total cost of the kitchen renovations was $152,725. The homeowners paid $126,362.50. However, the contractor never completed the job.

One of the areas which our construction lawyers often address is retainage.

The Use Retainage in New Jersey Construction Law

Retainage is an important device in construction law. Our attorneys have helped New Jersey contractors, subcontractors, owners and construction suppliers with issues related to retainage.

Retainage is an amount intentionally withheld from payment. It may be withheld by an owner from payment to a contractor, from a general contractor, to a subcontractor, or from a subcontractor to a lower tier subsubcontractor.

Retainage is a creature of contract law. It is governed by the provisions of the contract or subcontract between the parties. Whatever the contract says about retainage will control; and if retainage is not provided for in the contract, it is not allowed.

Since the terms of the retainage are governed by the terms of the contract or subcontract, drafting the contract is extremely important. It is essential to have an experienced attorney on your side. Our construction attorneys negotiate and draft contracts, subcontracts and supplier contracts. We review construction contracts for our clients and advise them on their rights and responsibilities.

Litigation Over Construction Disputes

Disputes are common, as retainage is typically required to be paid when the work is “subtanitially complete.” Parties often disagree on what that term means. When these disputes arise, our attorneys fight aggressively for our clients’ rights in negotiations, mediation, arbitration and litigation. However, we first attempt to avoid these disputes by drafting clear language in contracts which protect our clients’ rights.Continue reading

New Jersey provides new home owners with a warranty under New Jersey’s New Home Warranty and Builders’ Registration Act (“HOW”). The Act provides that newly constructed homes must conform to certain construction and quality standards and provide buyer of the new home with insurance-backed warranty protection in the event any of the standards are not met. Simply put, the Act provides that every new home sold in New Jersey comes with a warranty.

Builders of new homes must register with the New Jersey Department of Consumer Affairs to be permitted to engage in the business of building new homes. Builders are then required to provide a three-tiered warranty program which provides coverage and protection against defects.

Warranty coverage extends to defects caused by faulty workmanship and defective materials during the first year of ownership. The one year begins to run on either the first day of occupation or the settlement date, whichever is sooner. Additionally, during the first two years new home owners have a warranty that covers defects caused by faulty installation of heating, electrical, plumbing, and cooling systems. The Act, however, does not extend the coverage to appliances beyond the warranty provided by the manufacturer. Finally, the Act provides for warranty coverage to major construction defects of the home for ten years.

At first glance the Act appears to provide homeowners a cost-savings means of resolving disputes concerning construction defects. However, in reality the Act makes it difficult for homeowners to resolve construction defects. For example, “major construction” defects have been interpreted by the courts very stringently. Generally, the act affords no protection unless the new home is practically collapsing. Additionally, common problems such as leaks, mold, and excessive settling are not covered.Continue reading

The Highlands Water Protection and Planning Act is a relative new law, signed by New Jersey’s then-Governor McGreevey on August 10, 2004. The Highlands Act seeks to protect the ecological integrity of the highlands region in northwest New Jersey. In short, the Act, under the New Jersey Department of Environmental Protection’s supervision, regulates and restricts development in the area. Indeed, it aims to protect and preserve not only the area’s animal and plant life but also a large source of fresh water for human consumption.

The New Jersey Highlands covers a vast span of the state covering over 1,250 square miles, and is home to nearly nine hundred thousand residents primarily in the counties of Warren, Morris, Hunterdon, Passaic, and Sussex.

Of the over eight hundred thousand acres of the Highlands region, nearly four hundred thousand acres have been designated as the Highlands Preservation Area. The remaining acres are designated as the Highlands Planning Area.Continue reading

There are severe civil and administrative penalties for misclassification of workers who should actually be employees as independent contractors. If a worker is classified as an employee, the employer must pay approximately an additional 7.5 percent of her salary in payroll taxes, as well as workers compensation insurance, and the benefits which other employees get. This gives businesses a strong incentive to classify workers as independent contractors. However, this has long been illegal under both federal and New Jersey Employment law.

New Jersey has found this practice to be widespread in the construction industry, depriving workers of benefits, social security taxes, and forcing the employer to pay self-employment tax, or the employer’s portion of the payroll taxes. Additionally, the New Jersey Legislature has found that this puts businesses currently classifying workers as employees at a competitive disadvantage with those whose do not because of the higher costs they bear. New Jersey therefore enacted the New Jersey Construction Industry Independent Contractor Act.Continue reading

New Jersey’s Contractors’ Registration Act, passed in 2004, requires contractors to register with the Division of Consumer Affairs (known as “the DCA,” a part of the Department of Law and Public Safety in the Attorney General’s Office) and disclose specific information to homeowners in a written contract. Violation of this act carries significant penalties.

The Act requires disclosures such as start and stop dates; materials to be used; and payment amounts, breakdowns, due dates and bench marks. It also requires proof of insurance; display of registration numbers; certain other specific information; copies of warranties; and notices of the consumer’s right to cancel within three business days.

Violations of same provisions of the Act can be crimes of the fourth degree, with sentences up to eighteen months in prison, and violation of New Jersey Consumer Fraud Act, which entitles homeowners to triple damages plus their attorneys fees. Therefore, it is good practice for contractors to have experienced attorneys who know the requirements of the Act draft their written contracts.